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Does Europe unfairly tax US imports? A detailed look

© POOL/AFP/File / by Delphine TOUITOU | European Commissioner for Trade Cecilia Malmstrom (C), US trade representative Robert Lighthizer (L) and Japan's Economy Minister Hiroshige Seko arrives for talks after in the wake of US President Donald Trump's tariffs announcement


US President Donald Trump claims American exports face unfair duties when they reach European shores. But are they truly at a disadvantage?

- The baseline -

European Commission officials believe the European Union and United States generally offer reciprocally open access to each other's exports.

American exports to Europe are subject to duties averaging three percent, close to the 2.4 percent average the United States imposes on European goods and services, commission officials told AFP.

According to the World Trade Organization, however, in 2016 the US imposed minimum import duties of 3.5 percent while the equivalent rate in the European Union was 5.2 percent.

- Auto sector -

Trump points to US auto exports to Europe, saying they are taxed at a higher rate than European exports to the United States.

Here, the facts do offer Trump some support: US autos face duties of 10 percent while European cars are subject to duties of only 2.5 percent in the United States.

However, within the auto sector, the United States puts a 25 percent duty on imports of trucks and pickups, significantly higher than the 14 percent duty similar European products face in America.

Moreover, Trump is targeting German automakers in particular but these companies manufacture a significant number of autos in the United States itself, including for export to other countries.

For example, BMW says it exported $10 billion worth of cars last year to 140 countries after manufacturing them at a plant in Spartanburg, South Carolina.

The company claims it has been the biggest US auto exporter by value since 2011.

Fellow German automaker Mercedes-Benz says it produced 286,000 vehicles at its Tuscaloosa, Alabama plant for export to 135 markets in 2017.

But a trade war risks upending this arrangement.

Volvo CEO Hakan Samuelsson recently warned his company would cut half the 4,000-member workforce at its South Carolina plant if exporting cars from the US were no longer viable.

- Prohibitive tariffs -

About half of products exchanged face no duties at either end. Still, some products face very high, if not prohibitive tariffs.

Trump administration officials did not answer AFP queries. But European Commission figures indicate US cigarette cartons face import duties of 74.9 percent. Other goods, and agricultural produce in particular, also see high tariffs, such as carrots at 13.6 percent.

In the past, the office of the US Trade Representative has denounced the EU's $1,680-per-ton duty on US olive oil exports. US olive oil imports from Europe are taxed at only $34 per ton.

On the other hand, the United States has a stinging 164 percent duty on European peanuts while the equivalent US product faces duties of only 1.8 percent in Europe.

European exports of shoes (48 percent) and textiles (12 percent) also face much higher tariffs than similar US goods do on arrival in Europe.

Pointing to a few highly taxed exports, while ignoring the much larger array of goods and services that are subject to lower duties, gives an inaccurate picture of the general tariff situation, European Commission officials told AFP.

- Non-tariff barriers -

In addition to import duties, the US president complained on Twitter of European "barriers," a reference to non-tariff trade barriers such as phytosanitary conditions that can mean some goods are barred from importation.

Such questions were at the heart of talks to establish the Transatlantic Trade and Investment Partnership, a free-trade pact, which began in 2013 the Obama era before losing momentum and then ceasing under Trump.

At the time, Washington hoped to use the talks to break European resistance to US imports of agricultural goods such as GMO crops, hormone-treated beef or chlorine-washed chicken.

by Delphine TOUITOU

© 2018 AFP